Decommissioning Estimate for the Green River Wind Farm Phase I 

Executive Summary

Energy Ventures Analysis, Inc. (EVA) was asked to review the Green River Wind Farm Phase 1 Decommissioning Plan that had been prepared for the applicant by Sargent & Lundy Consulting (S&LC) that explains RMT Energy’s decommissioning estimate. If this plan was found to be unrealistic, EVA was to prepare an independent decommissioning cost estimate that would more closely approximate current decommissioning cost.

Our review found that the S&LC/RMT Energy report was unrealistic that resulted in vastly underestimating current decommissioning cost by more than $19 million. The Green River Phase 1 project as proposed represents a very large future financial risk to return this site to pre-project conditions. These decommissioning costs should continue to change in the future as scrap market values change, construction labor costs escalate and local disposal costs rise with increased regulation and reduced remaining landfill capacity. EVA recommends that these future decommissioning financial and market risks should be assigned to the project developer and not to the local community through issuance of a project performance bond for a pre-described decommissioning scope of work defined by the local zoning board and issued by a highly rated bonding company.

A brief description of our major findings are described below and documented in this report.

The Green River Wind Farm Phase 1 Decommissioning Plan prepared by S&LC is merely a narrative supporting RMT Energy’s 4/30/2012 demolition cost estimate (Appendix A). S&LC provided no independent engineering cost estimates but merely compares it to select other wind farm constructor’s decommissioning estimates. RTM Energy is a wind farm constructor (Appendix B), but has no listed experience in decommissioning, demolition, disposal or salvage activities. The cost to take down the nacelle, hub and towers are likely to be known to wind farm constructors and are unchallenged and used in EVA’s own estimate. However, the RTM Energy 4/30/2012 estimate uses undocumented cost estimates, provides unrealistic salvage values, not available in Lee or Whiteside County, and assumes a very limited scope of work (e.g. no demo of access road or buried power lines). The applicant’s decommissioning report does not even include the metal recovery sizing costs, debris loading costs and Lee County landfill disposal cost fees for foundation concrete, blade disposal, non-metal disposal or realistic values for foundation removal, road or foundation land reclamation. There is no disclosed explanation for the values prepared by RMT Energy or divulged by S&LC.

As such, the applicant’s Green River Wind Farm Phase 1 Decommissioning Plan is inappropriate for financial or governmental decision-making. An independent decommissioning cost estimate was therefore required.

To develop its independent decommissioning cost estimate, EVA conducted a site-specific and comprehensive cost estimate that was based on current local scrap prices (Dixon Iron and Metal in Dixon, IL as well as Cimco Recycling Ottawa in Ottawa, IL); Lee County landfill dumping fees; and used transformer values from ELSCO Transformers of Cincinnati, OH. [ELSCO Transformers was not interested n purchasing either the wind turbine transformers or the master primary transformer (MPT) as their voltages, size were unique and had little resale value. This meant they had to be scrapped.] Local aggregate firms were contacted to determine if the removed used road gravel had salvage value. No surveyed firm was interested in the used road gravel.

The 2012 R.S. Means Building Construction Cost Data 70th Annual Edition was used to estimate various other decommissioning costs including cost of preparing wind turbine components, loading the metal or non-metal material for landfilling, cost to disassemble components for disposal or scrap, foundation removal, backfill and landscaping. As for used gravel disposal, both landfill disposal and local stockpiling were evaluated.

The EVA cost estimate is provided in five tables as listed below:

• Table 1. Decommissioning Cost Known to Wind Turbine Contractors and Items With Insufficient Details to Make Independent Demolition Estimates
  Estimate: $7,658,150
• Table 2. Estimate of Net Metal Scrap Value
  Net Back: ($2,482,592)
• Table 3. EVA’s Estimate of Non-Metal Disposal Cost
  Estimate: $815,721
• Table 4. Foundation Removal and Foundation Land Reclamation
  Estimate: $10,995,843
• Table 5. Road Removal and Road Land Reclamation
  Estimate: $2,512,200 in a local surface stockpile of about 20 acres (likely)
  or $8,968,900 if used gravel is forced to use the Lee County Landfill (unlikely)

The amount of scrap (280 tons steel) and access road length (128,000 ft.) mentioned in the Sargent and Lundy Consulting and RMT Energy decommissioning report was used for this cost estimate. The local board should recognize that these estimates may change with the selection of turbines and completion of detailed project designs.

Below is a comparison of the Sargent and Lundy and RTM Energy demolition cost analysis and EVA’s independent analysis. It shows EVA’s analysis has an estimated demolition liability of the RMT Energy demolition estimate of $20,202,079 for EVA vs. $174,550 for RMT Energy. …

Download original document: “Decommissioning Estimate for the Green River Wind Farm Phase I”
Download presentation: “Green River Wind Farm Decommissioning Risk and Cost”